Santos Confirms XRG Consortium Pulls $18.7 Billion Takeover Bid — Update

By David Winning

SYDNEY--Santos confirmed that a consortium led by Abu Dhabi National Oil Co. has abandoned a $18.7 billion takeover offer, highlighting disagreements over terms given the length of time it could take for a deal to complete.

Santos said it was informed by the consortium fronted by Adnoc unit XRG of its intention to withdraw the indicative bid on Wednesday evening. The Australian company had signaled it would have recommended its shareholders support an offer worth US$5.626 a share.

Investors appeared to be skittish about the fate of a deal that would have ranked among the largest in the energy sector this year. Santos's shares had jumped when the consortium's offer was made known in June, but settled at a significant discount to the bid price.

Market concerns rested in part on the deal being opposed by Australia's competition regulator and Treasurer, who would be required to decide whether it was in the country's national interest given Santos owns energy infrastructure including pipelines.

Santos acknowledged those hurdles in its regulatory filing on Thursday confirming the deal is off.

"The XRG Consortium would not agree to acceptable terms which protected the value of the potential transaction for Santos shareholders, having regard to the likely extended timeframe to completion and the regulatory risk associated with the transaction," Santos said.

Santos, Australia's second-largest oil and natural gas company, said there was also a disagreement over how to allocate risk between the consortium and its own shareholders.

XRG said late Wednesday that it wouldn't proceed with the offer, citing terms demanded by Santos's board.

The deal's collapse raises questions about Santos's strategy as a standalone company. Santos is completing two major projects in Australia and the U.S.--known as Barossa and Pikka Phase 1, respectively--that will boost its cash flow and pave the way for higher returns for shareholders than the payouts of recent years.

However, the takeover bid put the spotlight on natural gas assets that Santos owns and could be developed to ease shortages of the fossil fuel in Australia's east coast. XRG had said it was prepared to commit long term to Australian energy production, enhancing regional energy security, if its bid succeeded.

While the XRG consortium was carrying out due diligence, Santos said memorandums of understanding with Australia's Orica and France's Engie for supply of natural gas from the undeveloped Narrabri project in New South Wales state to the domestic market. The supply is conditional on Santos making a final investment decision on the Narrabri project.

Any development of Narrabri would test investors' appetite for another period of significant capital expenditure, especially after Santos had signaled an intention to balance new investments with higher shareholder returns.

"Santos has a clear strategy, strong leadership and high-quality growth opportunities across our global portfolio," said Keith Spence, Santos's chairman, on Thursday. "The board is confident these strengths will deliver long-term value for shareholders."

Write to David Winning at david.winning@wsj.com

(END) Dow Jones Newswires

September 17, 2025 19:01 ET (23:01 GMT)